Estimation of Value-Based Price for 48 High-Technology Medical Devices

Value-based price is estimated quite frequently for medicines, but its application to medical devices is scarce. While some reports have been published in which this parameter has occasionally been determined for devices, no large-scale application has yet been reported. Our objective was to pursue a systematic analysis of the literature published on value-based prices of medical devices. Pertinent papers were selected upon the criterion that the value-based price was reported for the device examined. The real prices of the devices were compared with their values of value-based price and the ratios between real price versus value-based price were calculated. A total of 239 economic articles focused on high-technology medical devices were selected from a standard PubMed search. Among these, the proportion of analyses unsuitable for value-based price estimation was high (191/239; 80%), whereas adequate clinical and economic information for estimating this parameter was available in 48 cases (20%). Standard equations of cost-effectiveness were applied. The value-based price was determined according to a willingness-to-pay threshold of 60,000 € per quality-adjusted life year. Real prices of devices were compared with the corresponding estimates of value-based prices. From each analysis, we extracted also the value of incremental cost-effectiveness ratio (ICER). Our final dataset included 47 analyses because one was published twice. There were five analyses in which the ICER could be estimated for the treatment, but not for the device. In the dataset of 42 analyses with complete information, 36 out of 42 devices (86%) were found to have an ICER lower than the pre-specified threshold (favorable ICER). Three ICERs were borderline. A separate analysis was conducted on the other three devices that showed an ICER substantially greater than the threshold (unfavorable ICER). Regarding value-based prices, the values of real price were appreciably lower than the corresponding value-based price in 36 cases (86%). For three devices, the real price was substantially higher than the value-based price. In the remaining three cases, real prices and value-based prices were very similar. To our knowledge, this is the first experience in which a systematic analysis of the literature has been focused on the application of value-based pricing in the field of high-technology devices. Our results are encouraging and suggest a wider application of cost-effectiveness in this field.


Introduction And Background
Value-based pricing represents an approach for managing healthcare products in which the price of the product is assessed according to cost-effectiveness; this implies that the cost-effectiveness ratio of the product is determined and compared with the current standard of willingness-to-pay (WTP) threshold. This concept has been debated in the scientific literature for more than 20 years, and its application has generally been focused on medicines, particularly in the area of innovative agents [1][2][3][4][5][6][7]. A number of national regulatory agencies (e.g., in the United Kingdom, France, Germany, and Canada) have formally adopted algorithms that estimate the value-based price for newly introduced medicines [2,7,8]. To our knowledge, no reports can be found in the literature published thus far that describe any systematic analysis of value-based pricing in the field of medical devices [8][9][10][11][12]. A PubMed search conducted from inception to the present date shows a series of sporadic reports of value-based pricing applied to individual devices, particularly hightechnology ones; among these, numerous reports reflect a research project sponsored by the manufacturer [8][9][10][11][12].
In a previous article [12], we analyzed a small group of high-technology devices that were consecutively approved in the Tuscany region from January 2020 to December 2021 [13]. In the present work, we describe a more extensive analysis based on literature data and focused on the experiences of value-based pricing published thus far in the field of medical devices. In these studies, the value-based prices were computed according to standard cost-effectiveness methods and were also compared with the current prices obtained from the Italian market ("real prices").

Literature search
A standard PubMed search was conducted to identify medical devices, that had been the subject of an economic analysis (keywords: medical devices, economic analysis, cost-effectiveness analysis, cost-utility analysis, quality-adjusted life year*, QALY*). In general, to apply the method of value-based pricing, a costeffectiveness model is needed in which both clinical effectiveness and healthcare cost incurred by the device are interpreted according to standard principles of health technology assessment; this approach requires that the clinical effectiveness is expressed in quality-adjusted life years (QALYs). We accepted such models from studies published in the PubMed database provided that the model was judged to be appropriate by the four authors of this report and a specific reference to a peer-reviewed article was available. Given that PubMed was the source of all eligible articles, a minimum standard, a scientific quality was ensured by the peer-review process to which all PubMed articles are subjected; to go beyond this basic criterion, the four authors were requested to confirm the adequacy of the economic model employed in the article by examination of full texts.

Estimation of value-based price
In comparing two hypothetical treatments denoted as A (novel treatment) and B (comparator or standard of care), the standard formula to determine the incremental cost-effectiveness ratio (ICER) is as follows: where QALYs are quality-adjusted life years per patient and costs are normalized to a patient as well.
In the estimation of value-based price for A, cost A can firstly be split into the price of the device (price A ) plus the other costs incurred in the clinical use of A (denoted as othercosts A ). Hence, It should be noted that also cost B includes the same two components (i.e., price B + othercosts B ); however, splitting cost B is not needed if, as in the present case, the calculation is aimed at estimating the value-based price for A. Furthermore, the original analyses are likely to frequently exclude both othercosts A and othercosts B when their two values are identical.
Since ICER is ICER = (price A + othercosts A -cost B ) / gain QALYs and incrementalcost AvsB is incrementalcost AvsB = price A + othercosts A -cost B , the equation of ICER can be rewritten as follows:

Data sources and selection of devices to be included in our analysis
A simple flowchart (not reported herein) was employed to describe the process by which we verified the presence of a suitable cost-effectiveness model. Regarding the currency used in our analysis, our results were expressed in €; different currencies were converted into € according to the Oanda website (http://www.oanda.com/currency-converter/). In our analysis, Equation 7 was used to estimate value-based prices, while the values of gain QALYs , cost A, othercosts A , and cost B were drawn from the referenced papers; the value of the WTP threshold was set at 60,000 €/QALY gained. Figure 1 illustrates the flowchart of the selection process that, among the 239 eligible citations, allowed us to select those supported by adequate cost-effectiveness data. Each citation was associated to the device assessed in the analysis; thereafter, our reports presented all results in terms of devices rather than citations. The proportion of analyses unsuitable for value-based price estimation was high (191/239; 80%), whereas adequate clinical and economic information was available in 48 cases (20%). Our final analysis involved 47 devices because one duplicate study was found in our literature search. Of these, 20 referred to the cardiological area, while the remaining 27 referred to other clinical disciplines.

FIGURE 1: Flow diagram describing our selection of included devices.
The first PubMed query was based on the following keywords: "medical devices, economic analysis, costeffectiveness analysis, cost-utility analysis, quality-adjusted life year*, QALY*) with filter set to last 5 years.
Table 1 (in columns 1 through 9) shows the main information about these 48 devices (including the duplicate study) along with the respective sources of cost-effectiveness data. In the dataset of 42 analyses with complete information, four devices (9.5%) were found to have an ICER substantially higher than the threshold; three (7.1%) had a borderline ICER (i.e., ±15% compared with the threshold of 60,000 €/QALY), while the remaining 35 (83.3%) had an ICER clearly lower than the threshold. These values represent the ICER based on the device (not based on the treatment).

ICER, Incremental cost-effectiveness ratio
Using these cost-effectiveness data, we estimated the values of value-based prices already shown in Table 1 (columns 10, 11, 12, and 14), Figure 3, and Table 2. The calculation of value-based prices was applied separately to the treatment (i.e., all healthcare procedural costs including the device) and to the device. In this framework, the value-based price with respect to the treatment (last column in Table 1) could be estimated in all 47 treatments. On the other hand, the value-based price with respect to the device could not be estimated in five cases because the information needed for this purpose was unavailable; hence, the calculation of value-based price with respect to the device could be performed in 42 cases.
In our comparisons between real prices and value-based prices for the above-mentioned 42 devices (Figure 3), real prices were appreciably lower than value-based prices in 36 cases (86%) and were similar (±15%) in three cases. Three devices showed a real price substantially greater than the value-based price (Perceval for severe aortic stenosis, Yttrium-90 microspheres for hepatocellular carcinoma, and the Argus II retinal prosthesis system). These three devices deserve to be examined in more detail.

FIGURE 3: Comparison between real price and value-based price for the 42 devices included in the main analysis.
Detailed information on this analysis is presented in Table 2.
Perceval is a suture-less valve indicated in severe aortic stenosis. The profile of its price (real price, 3107 €; value-based price, 2155 €; ratio, 1.44) is mainly guided by the low incidence of the device cost (irrespective of its nature of real price or value-based price) over the overall cost for treating these patients.
Yttrium-90 microspheres are used for trans-arterial radioembolization in locally advanced and inoperable hepatocellular carcinoma as an alternative to sorafenib; the microsphere treatment was not found to be a cost-effective option at the usually accepted WTP thresholds. The ICER was 2,863,167 € per QALY gained; this unfavorable result was mainly guided by the gain QALYs, which was minimal. Regarding prices, the real price is about twice the value-based price (ratio, 2.07).
Argus II is a retinal prosthesis system for advanced retinitis pigmentosa. This device helps people see better and is generally safe to use. The device is costly (around 180,000 Canadian$), but because retinitis pigmentosa is rare, the budget impact of publicly funding this device in Canada is less than 1 million $ per year (assuming four implants per year per patient). Regarding prices, also for this device the real price is about twice the value-based price (ratio, 2.15). Table 2 shows detailed information about real price, valuebased price, and their ratio for each device analyzed in Figure 3.

Discussion
The main finding deriving from our study is that the great majority of economic analyses focused on medical devices show a favorable cost-effectiveness profile, while an unfavorable profile was found in a small minority of cases (3 out of 42, 7.1%). This is a quite unexpected result for which no straightforward explanation can be proposed, but some plausible hypotheses can however be considered. Firstly, it is well known that a remarkable publication bias affects pharmacoeconomic and cost-effectiveness research [6].
Since economic analyses reporting favorable results are more likely to be published than those reporting unfavorable results, our study might simply reflect this well-known tendency. Another hypothesis is that, in the pharmaceutical market, more economic research is being carried out than in the field of devices, and so more efforts are made to claim high prices for medicines than for devices.
Regarding the areas where value-based price deserves to be applied, they include especially the case of innovative devices [52], where innovation can be managed according to recent definitions [9]; also tenders are suitable for the application of value-based pricing [53]. In both cases, value-based prices can be useful either to guide the first purchase of a new device or to determine the starting price of a tender lot.
Our study likely reflects the pros and the cons that are typical to any research conducted in an unexplored area. In the first place, our results suggest the need for a wider application of this type of analysis. On the other hand, since this is a preliminary report, other studies hopefully will follow, likely designed in a different way and more based on real data than on literature data.
In our previous article [12], we emphasized a few points, that are fully confirmed by the present investigation and that we repropose with nearly the same words: Point 1: When the literature search of cost-effectiveness data is successful, obtaining the value-based price proves to be an easy task.
Point 2: The method proposed herein for value-based price estimation is an approximate one. On this premise, when the reference cost-effectiveness study has been conducted in a foreign country with a healthcare system similar to ours, the various items of health-care cost generally remain valid (apart from the mandatory conversion from one currency into another). Much caution is instead needed when the healthcare system is substantially different; in such a case, clinical data likely remain valid, but the information on costs needs to be entirely reassessed.

Conclusions
To summarize the current state of the art concerning the methods for the governance of medical devices, the application of the principles of cost effectiveness is increasingly considered a mandatory objective. There are two main fields of application. Firstly, when tenders are concerned, cost effectiveness can be used both to set the starting price of the various lots and to adjudicate the winner of each lot through a balanced evaluation of costs and benefits; in this balance, the winner is not the product that offers the lowest price, but the product that offers the best ratio between all sources of cost (including the price offered), and all benefits; it should be stressed that, in the evaluation of benefits, all clinical parameters (e.g., the outcomes) must be expressed in monetary units, and reference must explicitly be made to the societal WTP threshold recognized locally. Secondly, also in the assessment of each innovative product, cost-effectiveness is applied but in a different fashion: on the premise that a WTP is recognized, the value-based price of the innovative product needs to be estimated, and a comparison must be made between the price offered and the valuebased price calculated separately. In addition, the same analysis can be made though in the opposite direction; the cost effectiveness ratio of the product is calculated, and this ratio is compared with the WTP threshold recognized by the society. This comparison permits to conclude that the economic profile of the new product is favorable, when the ratio remains below the threshold, and instead is unfavorable when the ratio exceeds the threshold. in more general terms, the need to interpret more accurately the available literature is another important point; this implies to use specific investigation methods (e.g., the gap analysis) to understand why the area of devices is so less advanced than that of medicines, and to better differentiate the clinical evidence that emerges from the real world from that generated within formal clinical trials.
All in all, in this framework, the application of cost-effectiveness is important especially for advanced medical devices and therefore needs to be promoted more and more. Regarding the value-based price, when the available data allow for their estimation, the practical relevance of these estimates is extremely high, mainly because its absence would imply to purchase these products with no objective pricing criterion. On the other hand, one should be aware of the unsolved drawbacks of these procurement methods, e.g. when cost data must be transferred from one country to another.

Conflicts of interest:
In compliance with the ICMJE uniform disclosure form, all authors declare the following: Payment/services info: All authors have declared that no financial support was received from any organization for the submitted work. Financial relationships: All authors have declared that they have no financial relationships at present or within the previous three years with any organizations that might have an interest in the submitted work. Other relationships: All authors have declared that there are no other relationships or activities that could appear to have influenced the submitted work.